Statics and dynamics, Macroeconomics

Assignment Help:

 

Statics and Dynamics 

Economic models deal with stock and flow variables. These variables can be in one of the two states - equilibrium or disequilibrium - at a particular point in time. If the variables are in the equilibrium state and tend to repeat themselves from one time period to another, we have the case of "stationary equilibrium". If the variables are in a state of disequilibrium, in all likelihood they would have different values in the next time period.Models which do not consider explicitly the behavior of variables from one time period to another are called 'Static' models. In static models, the variables do not have time dimension. Because these models do not consider the passage of time, they cannot explain the process of change. Static models indicate the values of variables for a given time period but cannot indicate what their values will be in the next period. At the most they can only indicate the direction of change. In contrast, dynamic models consider explicitly the movement of variables over different time periods. What happens in one time period is related to what happened in the preceding time periods and what is expected to happen in the succeeding periods. In other words, variables in dynamic models are said to be 'dated'. These models indicate the movement of variables from one disequilibrium position to another, until the variables ultimately reach the equilibrium position.


Related Discussions:- Statics and dynamics

Calculate the equilibrium level of income, The economy of Macroland has a b...

The economy of Macroland has a balanced budget with fixed government expenditures G = 150 and T = 150. Investment is autonomous: I = 200. The consumption function is the foll

Moving along a demand curve, Moving along a demand curve, quantity demanded...

Moving along a demand curve, quantity demanded decreases 8 percent when price increases 10 percent. a. The price elasticity of demand is calculated to be____________ b. Given the

Manufactures artificial trees and flowers, Face Tree manufactures artificia...

Face Tree manufactures artificial trees and flowers. There are about 100 workers who do the routine assembly work for pay ranging from $8 per hour to $15 per hour. They work in two

Give example of commercial banks how they create money, Give example of com...

Give example of commercial banks how they create money For example, the borrower uses the money to buy an apartment, the funds are transferred to the seller of the apartment. T

Traditional or a roth ira, Suppose one of your clients is four years away f...

Suppose one of your clients is four years away from retirement and has only $1,500 in pretax income to devote to either a Roth or a traditional IRA. The traditional IRA permits inv

Right to give blood, Singer suggests that although the right to sell blood ...

Singer suggests that although the right to sell blood does not threaten the formal right to give blood, it is incompatible with "the right to give blood, which cannot be bought, wh

Marginal, using the marginal utility theory explain the consumption patten ...

using the marginal utility theory explain the consumption patten of consumers

Impulse response functions, The final and most important part of the method...

The final and most important part of the methodology is the impulse response functions which will provide the most information with regards to the aim of the project. In order to a

Assigment question, Ask question #Minimum 100 wordsThe following is the inf...

Ask question #Minimum 100 wordsThe following is the information from the national income accounts for a hypothetical country: GDP

Average price-earnings ratio, In a survey of 155 publicly-traded companies,...

In a survey of 155 publicly-traded companies, the average price-earnings ratio was 18.3 with a standard deviation of 7.6. When testing the hypothesis (at the 5% level of significan

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd